India's top factory hub scraps $2.86 billion airport plan, eyes alternative sites

CHENNAI: India’s top manufacturing state Tamil Nadu is dropping plans for a second airport to serve its capital Chennai, its chief minister said on Monday, despite calls for expanding aviation capacity to meet the needs of industry.

Chennai, dubbed India’s Detroit, hosts factories of Hyundai, Renault and Apple suppliers Foxconn and Tata Electronics.

The state has identified alternative locations that will have significantly less impact on agricultural land, Chief Minister Joseph Vijay, who ended a decades-old duopoly of two major parties in May, said.

The previous government had received civil aviation clearance to develop an airport at Parandur, near Chennai, at an estimated cost of 274 billion rupees ($2.86 billion). The project had faced opposition from farmers.

Consultancy Colliers had said the airport would spur demand for industrial parks, air-cargo warehousing and manufacturing facilities nearby.

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Industry lobby group Confederation of Indian Industry’s southern region chairman Ravichandran Purushothaman said it was critical the government swiftly finalise an alternative site and prioritise the project to support Chennai’s rapidly expanding industrial, manufacturing, logistics and services sectors.

Tamil Nadu accounted for roughly 15% of India’s factories and manufacturing employment, the highest among states, according to a federal government statement from a year ago.

The state government also plans to expand an existing airport, which handles 30 million passengers a year, to 55 million by upgrading an existing terminal and building a new one.

Tamil Nadu signed nearly 100 investment pacts worth 674.52 billion rupees in August, including from France’s Saint-Gobain, Indian jeweller Titan and U.S. server maker Super Micro Computer.